Spend Matters PRO on Supplier Information Management

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[This piece was originally published on 6/27/12 by Thomas Kase.]

This Spend Matters PRO "Be Smart About" series aims to give you a head start in preparing yourself and your company for modern SIM solutions. It covers what some of the best practices look like, and how to engage more effectively with solution providers and will even give you a list of firms to look at in Part 2 – with some insights into their strengths and potential caveats/concerns that should be explored in a selection process.

Perhaps you already know that your ERP system's vendor master isn't really cutting it in the supplier information management (SIM) area. Or you've been to a few trade shows, probably even seen a solution demo or two, and now you're excited about the possibilities with modern SIM solutions.

But which tool to select? What to ask for? What is really important in a solution and in a solution provider over the long haul? With all the excellent SIM solutions in the market place, how should you come up with the right criteria to help build a list of vendors for the final selection round? Here's a quick tip: the answer is not found in a weighted scorecard fed with responses from a 500-question spreadsheet around features.

What are the most important Be Smart tips for SIM? Here's a summary of the first part of this series:

  • Do your internal homework: develop a crystal clear understanding around how all aspects of SIM (there are many) are currently managed by your organization
  • Learn from others: no need to spend good money on reinventing the wheel
  • Understand your success drivers and pain points: even if there are substantial strategic gains to be had from SIM solutions, you need to meet clear short-term objectives and deliver solid success stories
  • Take a broad view of stakeholders – engage not only corporate procurement but also the BU level, legal, finance, HR and others, even your key suppliers!
  • Develop a strategic SIM vision for your firm – this will transform the way you do business

On to the story...

Why the need for change? First of all, you should consider why you need a better way to engage with your vendors? This should be not only tangible (tied to KPIs) but also provide as complete of a picture as you can make it. SIM is one area where all companies are different. We will get to a broader answer later but the immediate short-term answer is probably better supplier documentation or compliance needs arising from one or more of these relatively reactive triggers:

  • Procure to pay initiatives – no contact information
  • Supplier diversity – who is properly certified?
  • Tax and regulatory compliance – OFAC, TIN
  • Multi-tier spend analysis – how to aggregate spend data correctly
  • Sourcing opportunities – who can supply what?
  • Risk management – geopolitical, financial
  • CSR – GHG tracking
  • Onboarding – CoC, NDA, indemnification, insurance levels etc
  • Offboarding – access removed, property returned?
  • Site audits
  • Cost reduction workshops
  • More...

What are you changing from? Before you begin to engage with SIM vendors, you should take a good look at your current whos and hows around the vendor-related data your organization gathers, where it is stored, and by whom – and the workflow steps and processes used to manage initial collection, changes, storage and audits. Pay particular attention to what works well and what does not and document the reasons for either. Gnothi seauton, as the Greeks said: know thyself! Note also which internal repositories of data exist that can potentially be integrated into the solution. A SIM solution is intended to make your life more efficient and effective, so a little money spent on integration will go a long way.

The goal is to be prepared prior to sitting down with vendors – to have your KPIs and processes fully described. The effort spent upfront will pay dividends in many ways:

  • More rapid solution deployment
  • Reduced implementation expenses
  • Accurate feature matching with prospective vendor capabilities
  • Internal buy-in, leading to accelerated adoption and faster ramp-up

The last bullet is critical. Take the time to rally the troops across the company. Everyone stands to benefit from a one-stop SIM shop – everybody is a buyer at some point! And vendor data gathering, organization, retrieval, analysis et cetera consumes time throughout all organizations. Even if you are in a mandate-type environment, the SIM medicine will go down easier and work a lot quicker if you build (if not consensus) at least a strong group of allies in all areas of the company.

Engage your key suppliers and other non-traditional stakeholders! Your research should include engaging with your suppliers. Bring a select few into this project where suitable and understand where they feel there is a need for improvement, where they feel that they cannot express their capabilities, performance etc. To get to an optimal process, you need to involve all parties. There might be other stakeholders too. Your marketing department might want you to capture data points like demographics around your smaller vendors and your sales department might have data needs that can help them better tie buy side and sell side together. Even the HR department might need specific features that help them move to SOW engagements for staff augmentation activities.

What are you changing to? The above list of "needs to change" covers various valid, but short-term, needs that a modern supplier information management solution can address. However, SIM solutions can deliver so much more. These are some strategic supply chain visions to consider:

  • Business unit, corporate procurement, collaboration around a single source of truth, MDM
  • Business process outsourcing without losing control
  • Integrate external supplier networks without drowning in data
  • Risk management with early warning alerts – not checkbox compliance

Most importantly, ensure that the SIM solution becomes a dynamic, living, tool that users are drawn to – a tool that stays relevant as business conditions change.

In Part 2 of this series, we will look more closely at common missteps in implementing solutions as well as provide a high-level of shortlist providers that companies should consider.

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